IP and Fast Moving Consumer Goods

I have had a number of interesting discussions with people working in innovation in the Fast Moving Consumer Goods (FMCG) industry in the past month. A few of these occurred at the 'Innovating for the Future' workshop in Sydney a couple of weeks ago, at which I spoke on intellectual property in the food industry.

What I am seeing from these companies are a lot of 'light-bulb' moments where they are finally starting to see the value in strategically protecting their technology- and design-related intellectual property (IP).

One of the reasons why this value may not have been so evident in the past is due to the nature of the industry. The IP system is fundamentally set up to encourage innovation in situations where innovation might not naturally occur. However, part of the nature of the FMCG business is that innovation has been a given: new features, new flavours, new packaging are a must to compete in a crowded shelf space. No special incentives have historically been necessary in a world where products lives are relatively short and competitors are continually pushing for market share.

That is the way things have been. But that is changing.

Throughout the developed world, and especially so in Australia, the rise of the 'private label' or house brand product in the various supermarket chains means your biggest threat now comes from your main customer! Where those customers are large and dominant in the market place, which is certainly the case in Australia's concentrated retail environment, the FMCG manufacturer is being squeezed continuously.

Most significantly, the retailers are adept and pressuring the innovative manufacturer to 'hand over' any successful innovation for use in their own private label range. This, over time, because a severe disincentive to innovate, as the expense and energy required to deliver innovation now provides almost no period of exclusivity in which the innovator can recoup and profit on their investment in innovation. There are always contract manufacturers who the retailers will set up to copy innovations almost immediately if the innovator is reluctant to share their work with the retailer.

And so enters the IP system, where innovation is has been disincentivised, a new tool can be found to, if not stop, at least slow down the march of innovations from the innovator to the retailer. Judicious use of the patent and design systems can create a better power relationship between the innovator and the retailer. The contract manufacturer can no longer step in with impunity to copy a protected new package, product, ingredient etc. In turn, the retailer has to wait longer, or pay more, for innovative FMCG products.

I expect to see this as a trend amongst the more 'switched on' FMCG companies.


by Adam Hyland

Changes Proposed to Australian Patent Prosecution

We have previously reported on the extensive changes to substantive patent law which will come into effect on 15 April 2013.

As with all patent office examinations throughout the world, one aspect is the substantive law: the other is the procedural rules under which the patent office operates. The draft amended regulations which implement these aspects of change have now been placed open for public comment.

Patent Examination
As had been foreshadowed by IP Australia, there are changes to the time frames for dealing with examination. Australia operates a deferred examination system, in which you may request examination at any time, but must do so within five years of the effective filing date, or within a deadline set by IP Australia in a direction to request examination. Third parties can also request examination. In many cases, international applicants await a direction.

At present, directions from IP Australia have a deadline of 6 months. This will now become 2 months. In general, this is a positive change, as it will reduce the period of time in which it is unclear whether an applicant will proceed further or not. From the perspective of the public, or someone conducting a freedom to operate enquiry, time periods where the intention of the applicant to proceed is unclear create uncertainty, and potentially clog up the system with patent applications that are never going to be progressed. It does mean that applicants will have to act more promptly on receiving a direction to request examination.

In a similar vein, at present once a first examination report issues, the applicant has 12 months to place the application in order for acceptance, plus a further 9 months for which response fees are payable, but only when a response is filed. This creates the situation that even where a highly adverse examination report issues, another party cannot be sure of the fate of the application for almost two years, until the notice of lapsing is published. That will now be reduced to a straight 12 months. Consequently, in almost all cases (other than where a hearing or appeal is filed), the fate of an Australian patent application will be clear within a year.

Again, in most cases this is a positive change, as it will mean that applications will be brought to a conclusion more quickly. However, it does allow less time for an applicant to wait for the outcomes of prosecution in other countries, which may lead to inefficiencies in some cases.

Effective date
These changes are proposed to be effective for any application where a request for examination or direction to request examination (as applicable) occur after 15 April 2013. We think that it is unlikely that these changes will not proceed.

These changes provide another reason why we urge applicants to consider entering national phase in Australia early, and requesting examination prior to April 2013. The changes to onus of proof, new rules on support for claims, increased scope for inventive step attacks, and other amendments mean that there are very clear advantages for applicants to have requested examination in Australia before 15 April 2013.


by Peter Franke

New Zealand to join Madrid Protocol

The New Zealand government and IPONZ have announced that New Zealand will be a member of the Madrid Protocol, effective 10 December 2012. The instrument of accession was deposited on 12 September 2012.

The Madrid Agreement and Protocol is  a series of international agreements that allow an applicant from a member country to file a single application, designating many different territories, and if successful obtain protection in all of them, without requiring local action in those countries. Among the 88 members are  Australia, the US, European Union (and member states), Russia, China, Japan and South Korea. A full list of members is available here:
http://www.wipo.int/export/sites/www/treaties/en/documents/pdf/madrid_marks.pdf.

This means  that New Zealand can be designated in new or existing Madrid Protocol trade mark filings after that date. This may in many cases simplify and reduce the cost of the process of obtaining protection in New Zealand for Australian brand owners.


by Peter Franke

Atomo wins Engineering Excellence Award

We are delighted to congratulate our client Atomo Diagnostics Pty Ltd, and its development partner, design firm IDE, as winners of the Sydney Engineering Excellence Awards for 2012 for their MicroRapid Integrated Rapid Blood Test Device, the world’s first hand held integrated rapid diagnostic device.


MicroRapid won the Small Business Award, received a highly commended in the Innovations & Inventions category, and was also presented with the prestigious Bradfield Award. The Bradfield Award is the highest award across all categories and "recognises an accomplishment of exceptional engineering merit which makes a major contribution to the community".

Atomo aims to bring the detection of a range of diseases out of the laboratory and into homes and outreach clinics across the globe. A test for the rapid detection of HIV is the first clinical application being commercialised using the device and is due to be launched later this year.

The integrated design runs the complete test in a single device. This makes it ideal for clinicians to use away from the laboratory as well as enabling individuals to conduct their own blood tests at home. Current blood tests using similar formats require the use of a kit containing five or six items making them quite complex to use and resulting in high error rates.

"Our device makes rapid blood testing easier, more reliable and much more user friendly. This allows testing to be performed by anyone in any setting" said John Kelly, Chief Executive Officer of Atomo Diagnostics.

MicroRapid can be used for a variety of clinical testing including the detection of cardiac and cancer markers, a wide range of infectious diseases as well as consumer focused self screening for common conditions such as Celiac, Allergy, Thyroid imbalances and Anaemia.

The Engineering Excellence Awards Sydney (EEAS) recognise the expertise of both individuals and engineering organisations in the community. Their aim is to create wider recognition for the valuable input of engineers in our lives. Atomo’s MicroRapid device will now go on display in the Powerhouse Museum for twelve months. This display is expected to be seen by over a half a million Museum visitors throughout the year.


Franke Hyland are proud to represent Atomo and assist them in the strategic development of their IP portfolio internationally.

What Is A Design Worth?

Most people are aware, at least in a 'big picture' sense, what patents and trade marks are all about. Trade marks are there to tell you whether the product or service you are buying is 'genuine'. Patents allow an invention to be 'owned' by the person or people who invented it, so others can't copy the idea.

But what of design registrations? They protect the 2D or 3D appearance of many objects, but their scope is quite narrow. Design protection does not travel far beyond the exact shape or pattern that is registered. This means it often seems that the protection of the whole 'concept' that a patent provides is a far more useful way to spend one's IP protection dollars.

Alternatively, the ability to protect against the use of an image or shape that may not be identical, but may simply be confusingly similar, to one's distinctive product, makes trade mark protection seem the better option for IP protection of patterns and shapes.

However, a recent decision of a U.S. jury in the Apple v Samsung battle (U.S. District Court, Northern District of California; Apple Inc v. Samsung Electronics Co Ltd et al, No. 11-1846) reminds us of the value that a well-chosen design registration can have. In this case, the jury awarded Apple total damages of USD 1.05 Billion, based on the infringement of a number of Apple patent and designs, and on 'trade dress' infringement, by 28 different Samsung products.

Although the jury didn't spell out precise reasons for each of the damages amounts, it is interesting to look at which products attracted the biggest payouts. For example, the Galaxy Tab 10.1 WiFi PC, which infringed some patents but not any designs, attracted damages of USD 833,076 from 1.2 million units sold. By contrast, the Fascinate smartphone, which infringed a number of designs as well, attracted damages of USD 143,539,179 from 1.4 million units sold.

That seems to indicate that Samsung's design infringement was viewed as somewhat more serious than their patent infringement for these products. Perhaps this is not surprising for products whose sales are driven by design and 'coolness'.

Perhaps designs can hold their own in an IP strategy after all?

by Adam Hyland

Grants for Low Carbon Solutions

We are always conscious that some of our clients are looking for funding and venture partners, and on the lookout for ways to help.

GE have a new Ecomagination Challenge, which will see five winners awarded $100,000 cash, and a potential capital pledge of up to $10 million. This is specifically directed at technology which has the potential to delivery reduced energy and carbon footprints. For more information, see:

http://www.startupsmart.com.au/funding/$100000-grants-up-for-grabs-for-carbon-cutting-innovation/201208277373.html?utm_source=StartupSmart&utm_ca


by Peter Franke

Bye Bye Fair Basis?

As previously reported, the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 was enacted on 15 April 2012.

One aspect of the changes is the apparent demise of the test for 'fair basis'. Prior to the amendment, the claims of a patent must be (among other things) 'fairly based' on the matter described in the specification. The changes now say that the claims must be 'supported' by matter disclosed in the specification. This 'supported' concept is in line with the majority of overseas jurisdictions and was intended to be so.

The concept of 'fair basis' has often been a difficult concept to properly define. As a component of Australian patent law it was supposed to be a mechanism for balancing the scope of a patent claim granted to a patentee against what the patentee has revealed, in a practical sense, of how to implement the invention. In other words, the test for fair basis was to ensure that a patentee was not given a scope of patent monopoly beyond what is fair in consideration of what the patentee provides to the public. This is in line with the public policy considerations of the patent system, whereby a patent monopoly, of finite term, is given in exchange for a full public disclosure of how to implement the invention, which disclosed teaching is effectively public domain at the end of the patent's life.

What, then, is to provide the checks and balances against undue(albeit 'supported') breadth of patent claims?

There are two further changes effected by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 which may go towards filling in the gap left by fair basis in this regard.

Firstly, there has been a raising in the standard of disclosure in a patent specification. Whereas, a patent specification, prior to the amendment, was required to described an invention fully; it must now disclose the invention in a manner clear enough and complete enough for the invention to be performed by a person skilled in the relevant art. This raised standard of disclosure now also applies to Australian provisional patent applications. Consequently, provisional applications having overly conceptual disclosure (which was permitted) rather than real nuts and bolts practical disclosure will now be a thing of the past.

The second significant change relates to the issue of utility. A claimed invention has been required to be 'useful' to be patentable. The changes have introduced a threshold definition of when a claimed invention is to be taken as not useful: "... an invention is taken not to be useful unless a specific, substantial and credible use for the invention (so far as claimed) is disclosed in the complete specification". Furthermore, "the disclosure in the complete specification must be sufficient for that specific, substantial and credible use to be appreciated by a person skilled in the relevant art".

This change not only raises the disclosure requirements for Australian patent specifications, but also requires a disclosure of utility which supports the entire breadth of the invention claimed. In other words, conceivably a claim which covers something more than the level of disclosure provides sufficient utility may be found to be lacking in utility. An example of where this may prove relevant are claims which provide excessive ranges of parameters but where the specification provides practical working examples of only specific parameters, i.e. not the entire claimed range. This is not an uncommon feature of chemical and pharmaceutical patents.

This change in the utility threshold does have an aspect of providing some of the balance against undue claim scope which 'fair basis' once presided. One can predict that this area of patent law may become fertile ground for judicial review and development in the years to come.

The above changes will come into effect for all Australian patents and patent applications in which a request for examination is filed on or after 15 April 2013. Consequently, these changes can have a retrospective effect on existing pending Australian applications, unless a request for examination is filed by 14 April 2013.

by Simon Ellis